How Product Lifecycle Management Is Driving Innovation in the F&B Industry

The same advances in digitization that transformed healthcare, retail, cybersecurity and financial services industries are also changing the way food and beverage companies innovate. Ellen de Brabander, Senior Vice President of Global R&D, PepsiCo explains how the industry is poised to embrace the next wave of digital transformation.

Until recently, the way the food and beverage Opens a new window (F&B) industry innovated wasn’t very different from how mom or dad innovated in home kitchens. Dad built his reputation through his “famous” grilled cheese or other signature dishes, whereas F&B companies delighted consumers with blockbuster brands. 

It was just a question of scale.

Whether at home or in the grocery aisle, you can only serve the same grilled cheese sandwich or iconic brand for so long. Eventually, diners will ask the chef to spice things up. So, dad substitutes pepper jack for cheddar for a change, just as a food company might consider adding or removing potentially thousands of flavor and ingredient combinations, churning out as many as 20 different new product prototypes of a legacy brand in the process.

Inside both home kitchens and corporate test kitchens, this innovation model was based mainly on gut instinct and experience: Try something new and hope the “customer” approves. Cooking and developing new products was as much art as it was science. 

Though this innovation model is still alive and well in many places, it has become unsustainable in corporate test kitchens. It is too slow, too costly, and too inexact. Large F&B companies may spend more than 50% of their R&D time tweaking existing products to satisfy consumers’ needs and wishes or new regulatory requirements. That leaves little time to focus on potentially disruptive innovations. 

Learn More: 6 Ways to Build AI That Incorporates Integrity, Diversity, and Ethics

Accordingly, the time has come to turn the old innovation model on its head: We must simplify the process of “refreshing” legacy offerings to more effectively identify innovation opportunities. Two key trends are compelling F&B companies to adopt this revised approach to innovation.

First, consumer preferences have changed dramatically. For decades, consumers embraced—and rewarded—consistency and ubiquity. With this as a formula for marketplace success, F&B companies adopted a one-size-fits-all approach to innovation: Make a singular blockbuster product that appeals to the largest cohort of eaters or drinkers and scale it globally and efficiently. Then, every year, expand that product line with new flavors or packaging upgrades. 

But today’s consumers demand more novelty; they want niche offerings fueled by abundant choices and increased consumer interest in food. It is no longer enough to debut a great-tasting product that is safe and available at the right price. Nutritional value and sustainability impact are also important considerations. The consumer asks: “Is this product good for me? What ingredients are in it, why, and from where? Is this organic, non-GMO, etc.? Is the packaging recyclable?

Second, barriers to the market entry of emerging players have reduced dramatically. Today, an entrepreneur can launch, and operate, what might potentially become a global food or beverage company from his or her home—with little or no CapEx outlay. All that is needed is a kitchen and the internet to discover and finetune recipes to source ingredients worldwide and subcontract production to a plant with excess capacity. Today, you can outsource anything: sales, marketing, packaging design, food safety, and regulatory compliance can be dialed up or down at a moment’s notice. The entrepreneur may bypass retail distribution altogether and ship directly to the consumer via a third party. 

Therefore, the F&B companies that will compete successfully in the future will be the ones who migrate away from analog to digital models to a truly data-driven approach. 

Learn More: 6 Ways Organizations Can Manage Asset Logs to Prevent Catastrophic Events

For global players—who bring hundreds of innovations to the market annually—the scale is still essential. Still, speed, agility, and the ability to manage complexity are crucial as global brands may be operating in as many as 200 different countries and territories, each with its own unique set of consumer expectations and regulatory challenges. 

Therefore, the next wave of innovation in the food industry will be driven by digitized product lifecycle management—from concept to prototyping to final delivery to the consumer. Over the next decade, innovation will be driven by data as millions of inputs are captured, codified, and deployed. Inputs culled from social and traditional media will predict ingredient and food trends for specific consumer cohorts—customization rather than one size fits all. Further, the process of translating those insights into new products will be radically disrupted—and accelerated. 

Instead of making 20 prototypes of a new or refreshed product, only a few prototypes will need to be developed and tested with consumers to identify the winning new product formula and package. Every stage of product development will be informed by digital inputs such as product analytical data, ingredient safety records, consumer product liking scores, product stability tests, and so on.

Want to create a new beverage for, say, athletes ages 18-35? Data may suggest strawberry is an on-trend ingredient this year. But which strawberry flavor? There are approximately 400 different varieties to choose from. Flavor notes range from fruity to clove-y, to sweet, to jammy. Which to choose? Simulators will calibrate ingredients, to the milligram, in the quest for the perfect taste, texture, product stability, and aroma. If the beverage is to be distributed globally, should it be carbonated for the Japanese market and uncarbonated for the Egyptian market—or vice versa? If carbonated, how to calibrate bubble size preferences based on local market traditions and preferences? 

Since each nation has its own set of unique regulatory compliance requirements, how will the F&B company calibrate production simultaneously for multiple markets? Leveraging and connecting data sets, as well as advanced data analytics, will provide answers to those questions and deliver to consumers the personalized products they’re seeking at the right moment. And in a fraction of the time.

The days of twenty prototypes for an improved version of an F&B product currently in the market are happily numbered. F&B companies will operate with increased precision in the years ahead, attune to what consumers are looking for, and deliver on those wants with speed. 

The future of F&B is tremendously exciting. Manufacturers are about to become better and faster at delighting consumers. And, despite the investment required to convert to digitization, money and time will be saved, commercial and compliance risk will be reduced, and consumers will reap the rewards.

Let us know your thoughts in the comment section below or on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window . We would love to hear from you!